ARCHIVED: Legislative and Regulatory Update - July 22, 1996

Good morning. I am sorry that I cannot be with you this morning, but on relatively short notice, I found out that I had to fly home yesterday for a family celebration. If all has gone according to plan, I should be back on a plane about to touch down as you are watching this video. I may even see you by the end of the session; I will certainly see you later in the day.

Last year, Mary Alice and I told you that we were in for a wild ride during the 104th Congress. That early assessment has proven to be exceedingly accurate. Telecommunications reform, copyright reform, censorship on the internet, major changes in the Depository Library Program, and the inclination of governments at all levels to want to make money by selling their information, these are among the issues that have kept us running for the last eighteen months. I plan to focus my attention this morning first on copyright and other intellectual property issues and then on the prospective sale of West Publishing to the Thomson Corp.

There has been a great deal going on in copyright during the last year. It is hard to talk about everything in the space of a few minutes, but if you are interested in the issue, you may want to go to another session tomorrow afternoon in which we will be going into much more detail about these issues.

The copyright discussion heated up last fall with the release of the so-called AWhite Paper@, the report on Copyright and the NII prepared by the Working Group on Intellectual Property of the National Information Infrastructure Task Force. The Working Group was chaired by Bruce Lehman, who is Head of the Patent, Trademark Office in the Department of Commerce, and the report and its recommendations have a decidedly pro-copyright owner stance. Indeed, in the press conference at which the Report was released, the emphasis was placed squarely on the need to protect materials on the Internet in order to promote commerce. Almost no attention was given to the need of researchers --students, scholars, and small business people --to have access to the information.

As a result of that emphasis, even at the outset many felt that the Report lacked the kind of balance we have generally had in the United States between the rights of copyright owners and the needs of information users. There was a sense within several different communities that if the recommendations were enacted, the balance would be seriously upset.

Because of these concerns, there have been at least four different efforts in which we have been involved to help maintain the balance.

First, the Fair Use Conference. When an earlier draft of the White Paper was circulated, it contained nothing on fair use, but it did promise to convene a Conference to see if it was possible for copyright owners, working with librarians and educators, to develop some Guidelines for the applicability of fair use in the electronic environment. That group has met monthly for nearly two years, and three law librarians have participated actively in those meetings: Laura Gasaway, Sally Wiant, and myself.

Regrettably, as hard as the group as worked, there isn't really very much to show for it. There are a lot of discussion papers and many serious efforts to draft guidelines to accomplish different goals such as interlibrary lending, electronic reserves, or the use of multi-media works in the educational environment. But, from the beginning, publisher representatives said they did not want guidelines, fearing that Guidelines would probably represent an erosion of their rights. Now some of the library organizations are beginning to say the same thing: why should we be bound by Guidelines --they are just going to constrain us unnecessarily. So, I am not very optimistic about the future of the of the Fair Use Conference, although it has been an excellent vehicle for exploring the mutual concerns of librarians and publishers.

One good thing that did come out of these meetings was an agreement that the preservation section of the statute should be carefully updated to permit digital preservation of copyrighted works. Language to accomplish that goal was included in the final White Paper recommendations and in the draft legislation.

The second activity we have supported is the Digital Future Coalition.

Shortly after the White Paper was released last fall, it became clear that many groups were going to have problems with the recommendations. These groups included the library and education communities, broadcasters, civil liberties and privacy groups, the electronics industry, online service providers, and so on. Represenatives of these different industries met early last fall at American University and agreed to form The Digitial Future Coalition.

The Coalition found out quickly, however, that it was not going to be good enough just to express reservations about the legislation. Congressional staff wanted answers, and criticisms without fixes were seen as obstructionist and not helpful. As a result, the DFC began to identify solutions to the various problems. I presented the D.F.C. proposals to the Congress when I testified before the Senate Judiciary Committee on May 17,1996. The proposals included an expansion of the fair use section of the Act in a way that parallelled the proposed expansion in the rights of copyright owners. They also included proposals on distance education and proposals to allow someone to lend or give a copy of a work to someone else, the same way they might lend or give a copy of a book. Finally, the D.F.C. proposals included language to guarantee that the mere fact that a work in digital form is loaded into the random access or cache memory of a computer does not, in and of itself, constitute the sort of "copying" with which the law of copyright should be concerned. Such incidental copying occurs everyday by users of the Internet and ought not to be actionable.

Third, we have been involved in discussions on the extent of liability for online service providers.

This issue grows out of some recent cases holding online service providers liable for the infringements of their subscribers. These cases have caused great concern among organizations like America Online, Compuserve, and also among the growing number of Internet Service Providers. It also is, or should be, of concern to libraries, since in many ways, the lines are blurring between libraries and the online providers.

With this as background, the online service industry asked the Working Group to resolve the issue, by recommending legislation that would place responsibility for infringement on the person who uploaded the material, and not on the innocent carrier. Noting that not all carriers were so innocent, the Working Group declined to make such a recommendation, saying that it was premature to do so. The industry, however, believes that if a bill is to be enacted concerning copyright and the NII, it must deal with this issue. They feel exposed, and they believe that if the issue is not resolved it will literally put them out of business.

Because of the significance of the issue, Representative Goodlatte of Virginia convened a group of interested parties, including libraries, to discuss the matter and to try to come up with a solution. Those discussions continued throughout the spring, but they have not yet reached a conclusion. Fourth, more recently, the international dimension of the issue has moved to center stage.

Immediately after the White Paper was released, the administration began promoting the same issues before the World Intellectual Property Organization, with a view toward developing treaty language for an amendment to the Berne convention. There is now circulating draft treaty language that is virtually identical to the White Paper proposals. A series of regional meetings will be held on the proposals this summer in Asia, Africa, and Latin America, and a three week meeting is planned for December at which the proposal to amend the Berne Convention will be formalized.

All of this means that substantially the same set of proposals will almost certainly be reintroduced in the next Congress as a proposed treaty amendment. Such a proposal obviously comes in a very different procedural posture than a proposed amendment to our own domestic Copyright Act, and many are concerned about such an effort to do an end run around normal Congressional procedures for the development of U.S. Copyright policy. In fact, members of Congress asked in hearings last fall for assurance that their role would not be pre-empted in such a fashion. Although such assurance was quickly given, the development of this treaty language is now on the fast track.

Unrelated to the White Paper and the NII, but going forward at the same time is a proposal to extend the term of copyright.

Early in this Congress, a proposal surfaced to extend the term of copyright by an additional 20 years. This proposal would give new works a term of Alife of the author plus 70 years@ and older works a term of 95 years. It would create a 20 year moratorium on any new works coming into the public domain. It is being promoted by some important copyright interests, including the Gerschwin estate and the Disney company, and we were told early on that this bill would pass.

The proposal, however, would exacerbate the problems of libraries seeking to preserve their collections through the use of microfilm and digital technology. As a result of this concern, the library community submitted a proposal to exempt library uses during the 20 year period for purposes such as preservation, scholarship and research, so long as the work had not recently been commercially exploited by the copyright owner.

The proposal and the counter-proposal led to a series of discussions under the auspices of the Copyright Office this spring. The Register then submitted a recommendation to Congress that is generally favorable to library concerns. But the matter is far from concluded, and there are likely to be more discussions on this topic in the coming months.

That is the summary of what has been going on in copyright over the past year. In a related matter outside of copyright, in just the last 2 months, a new proposal has been introduced in the House. This proposal that would provide for separate intellectual property protection for databases, outside of copyright.

This new proposal is a result of the 1992 Supreme Court decision that held that the White Pages of the phone book were not copyrightable because they lacked sufficient originality. That case calls into question the copyrightability of any database, especially where the material is compiled automatically or where there is little or no judgment involved in the compilation.

Since that decision, a proposal has been developing in Europe for the protection of databases, without regard to originality. That proposal is now a Directive of the European Union and has been sent to the member states for implementation. Just two months after it was finalized in Europe, the same basic bill was introduced here in the House of Representatives.

If passed, the bill would protect databases on the basis of the investment made or the work required to create the database, not on the basis of originality. Databases consisting of government information otherwise in the public domain could also be protected under this bill, thus creating the potential for a monopoly over government information for those lucky enough or smart enough to collect such information when it was issued. Unlike the Copyrihgt Act, the bill contains no fair use provision or library exemption, although it does permit the extraction of Ainsubstantial@ amounts of information. Protection lasts in perpetuity, so long as the creator of the database continues to expand or modify it. Once they stop modifying it, protection lasts for 25 years.

This new bill --H.R. 3531 --is very broad. In fact, many fear that it is so broad it will swallow up most of copyright. Again, it has developed rapidly in the international arena, and it comes to the U.S. Congress with all that momentum and a certain presumption behind it. Those who have doubts about the policy behind this bill or who would like to see it tempered along the lines of the Copyright Act have an uphill fight ahead.

As you can see, we have spent a great deal of our time this year on intellectual property matters of one sort or another. Let me turn briefly now to the West-Thomson merger, with which we have been involved since the spring.

As everyone here must know, West Publishing and Thomson Corp. announced their intention to merge late last winter. The Board was concerned about this issue from the very beginning, but they also knew that all of the companies involved have been an important part of legal publishing industry for many years and have also been important to our profession in general and to our Association in particular. With that in mind, the Board determined to meet with representatives of the companies to hear their views on the impact the merger might have on law libraries and the availability of legal information.

Following that meeting, the Board discussed the issue at length and directed me to convey their concerns to the Department of Justice which was reviewing the proposed merger for potential anti-competitive effects. The Board was clear: they did not wish to oppose the merger outright. In fact, they were pleased that the sale of West to Thomson would keep West Publishing in a company with deep roots in American legal publishing, rather than move it off to a venture capitalist that had no long term commitment to our enterprise. The Board's goal was not to oppose the change per se, but to work with the Department to ensure the continuation of high quality legal information products at reasonable prices in a healthy competitive environment.

With that in mind, the Association raised five issues for the consideration of the Department. Those five points were:

1. Product competition and industry concentration.

2. Product pricing.

3. Choice of Format.

4. Impact on competition in the market for online services.

5. Continued competition in the development of new products, such as CD's and their associated search software.

The Department clearly attempted to respond to many of these concerns. They did a serious review that went through the product lines of the companies title by title. I know that many of you were contacted and asked your opinion on various issues. I met with them several times.

Following the investigation, by means of a stipulation and order dated June 19, 1996, the Department approved the merger contingent on serveral things happening: first, the companies would have to sell off some fifty-two products where the Department felt there would be too much concentration without divestiture. Second, they would have to license to other publishers the right to use the system of pagination in the print Reporter volumes at a capped fee. Third, LEXIS -NEXIS would be granted the option to extend for five years its current licenses for three non-legal databases. Fourth, California, Washington, and Wisconsin were granted the right to reopen the bidding for contracts presently held by Thomson for the publication of their official state reporters.

The question now is the adequacy of the proposed settlement. Some of our members have expressed concern about the cost of the proposed licenses for access to the system of Reporter pagination. Others have questioned the provision in the proposed license agreement that would compel a licensee to give up their right to challenge West's claim of copyright in the page numbers of their volumes. Some have wondered whether there are other products --or companies --that ought to be divested as part of the settlement. And there is some worry about the adequacy of the guarantees of product availability for LEXIS.

We are now in a 60 day comment period concerning the proposed settlement. Anyone may file comments before August 18 with Craig Conrath, Chief of the Merger Task Force at the Department of Justice. By the end of this annual meeting, this Association, either through its membership or its Board, will similarly need to decide whether or not to file additional comments. If directed to do so, I will file those comments by the end of the month.

As you can see, it has been an exceptionally busy year. The intellectual property issues were numerous and intense even before the West-Thomson merger surfaced as a new issue. Mary Alice and I will welcome your thoughts and comments on all of these issues. If you have particular concerns about the West-Thomson issue, you should make those concerns known either to me, or preferably to a member of the Board.

Thank you for your support and your interest. We look forward to continuing to work with you and for you during the coming year.